Based on data from the Energy Information Administration (“EIA”), residential and commercial end users consume over 40% of all electricity produced in the United States. At the same time, the Department of Energy (“DOE”) estimates that current energy inefficiencies in buildings result in electric system losses of up to 40%.
While residential users have experienced efficiency gains over the last decade from technology improvements in appliances and HVAC (“Heating, Ventilating, and Air Conditioning”) systems, these gains have been largely offset by a 40% increase in the number of homes, a 49% increase in the use of air conditioning, a 72% increase in the size of homes, as well as a steady increase in the number of home electronic devices being used. The average United States home now has 26 consumer electrical products and there are an estimated 124,000,000 United States residences. Fifteen million new commercial buildings are forecasted to be constructed over the next decade.
Moreover, global demand for fuel sources such as coal and natural gas, the addition of more generating capacity, and required investments in new transmission and distribution infrastructure will only push energy prices even higher than they are in today's market. Renewable and conventional energy supply construction costs are going up across the board, energy fuel costs are rising, operating costs are increasing and, the significant costs of cleaning the climate will soon be predicted.
In conjunction with these ever-growing levels of energy consumption and continuing increases in energy costs, legislative and regulatory policies addressing energy efficiency, renewable energy supply, and carbon emissions are causing utilities to search for new technologies to deliver affordable, low carbon, reliable energy supply to their customers. Political and economic pressures to reduce carbon emissions and protect our climate from global warming continue to mount.
For example, the nation's economic reinvestment and recovery stimulus plan included over $40 billion in funding towards developing technologies for making the nation more energy efficient. This figure represents a ten-fold increase over any previous year in annual federal investments for energy efficiency. Over $6 billion is targeted for increasing home energy efficiency and expanding current state energy efficiency programs. Special “decoupling” provisions have been included in the plan ensuring utilities that they will recover revenues that may be lost should end users consume less electricity as a result of the utility's end user energy efficiency programs.
In addition, the U.S. Energy Policy Act of 2005 encouraged adopting energy pricing time-of-use (“TOU”) rates to shape end user consumption behavior, reduce the need for expensive peaking generation and effectively increase grid utilization. Smart meters and advanced metering infrastructures (“AMI”) are needed to implement these strategies. The government estimates that 50 million advanced meters, representing an estimated $1 billion in utility investment, will be in the pipeline by 2010.
The Energy Independence and Security Act of 2007 supported creating the smart grid through modernization of the nation's electricity transmission and distribution system. It is estimated that $1.5 trillion of investment in transmission and distribution infrastructure will be made by utilities between 2010 and 2030. In the second half of 2008, over $275 million of new private venture funding was invested in companies developing and manufacturing communication networks and other technologies for smart grid solutions.
Generally, these smart grid initiatives aim at improving efficiencies in the utilities production and delivery infrastructure. The smart grid and demand response methods and technologies are designed to reduce consumers' peak energy demands. For example, the attempt to reduce total energy consumption used by a premise at a specific point in time by denying or limiting the consumer's user, but these technologies do not reduce total energy consumption. Moreover, these initiatives do not affect the highest contributor to energy waste in the overall system, i.e., the energy inefficiencies found in buildings and residences.
Furthermore, conventional systems, such as energy management systems, building automation systems, smart meters, home automation systems, in-premise displays, programmable communicating thermostats and DDC/Pneumatic control systems, take a singular approach to control and management, focusing only on controlling or managing the performance of the single electrical component asset or possibly the group of assets to which they are attached. These conventional systems rely on the premise occupant or premise facility manager to understand and input the correct parameters into the control systems in order to operate correctly. Further, these systems require that as conditions or premise circumstances change, these parameters be updated requiring premise occupants or premise facility managers to be extensively aware and knowledgeable of energy centric data facts such as current weather, upcoming weather, current energy pricing conditions, upcoming energy pricing conditions, other asset utilization and interactions between the current asset and the other premise assets.